Compounding Interest
Presentation
•
Mathematics
•
9th - 12th Grade
•
Hard
Joseph Anderson
FREE Resource
6 Slides • 7 Questions
1
2
Interest that is compounded multiple times throughout the year
3
Interest Period - the amount of time that passes before interest is calculated
Future Value/Maturity Value - the sum of the compound interest and the original principal
Period Interest Rate (R) - the interest rate applied to each period, use the period interest rate in our calculations
4
Multiple Choice
If you have an investment that compounds interest monthly with an annual interest rate of 4%. What will the period interest rate(R) be?
.4/12
.04/52
.04/12
5
Annually - every 12 months
Semi Annually - every 6 months
Monthly - every month
Semi Monthly - twice a month
Daily - every day
6
Multiple Choice
If you compound interest monthly for 5 years, how many periods of interest (N) would you have?
5
12
60
7
Multiple Choice
If you compound interest quarterly for 7 years, how many periods of interest (N) do you have?
28
7
21
82
8
The amount of your investment after a certain amount of time
FV = Future Value
P = Original Principal
R = Period Interest Rate
N = # of periods
9
Multiple Choice
An investment of $7,000 is compounded daily for 6 years. The interest rate is 4% annual. What value will you enter for R in the given equation?
.004/365
.4/365
.04/365
.04/6
10
Multiple Choice
An investment of $7,000 is compounded monthly for 6 years. The interest rate is 4% annual. What value will you enter for N in the given equation?
12
6
24
72
11
I = Amount of Compound Interest
P = Original Principal
R = Period Interest Rate
N = # of periods
12
Multiple Choice
An investment of $17,000 that is compounded quarterly for 15 years with an interest rate of 3.85% annual. What value will you enter in for R in given equation.
.0385
.0385/4
.385/4
.0385/15
13
Multiple Choice
An investment of $17,000 that is compounded quarterly for 15 years with an interest rate of 3.85% annual. What value will you enter in for N in given equation.
4
60
30
15
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